The Effect of Tax Rates and Tax Bases on Corporate Tax Revenues: Estimates with New Measures of the Corporate Tax Base

No 18440, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Several recent analyses have suggested that the revenue-maximizing corporate tax rate resides in the low-30's. We challenge this result by re-examining this relationship using a new compilation of changes in corporate tax base definitions for OECD countries between 1980 and 2004. By considering tax base changes in addition to tax rate changes, we can address the estimation bias that applies to tax rates absent their consideration. We find that the relationship between corporate tax rates and corporate tax revenues is tenuous. The large behavioral response to corporate tax rates implied in the literature does not obtain when accounting for persistent differences in tax policy and business environments across countries.

JEL-codes: H25 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
Note: PE
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Citations: View citations in EconPapers (27)

Published as The Effect of Tax Rates and Tax Bases on Corporate Tax Revenues: Estimates with New Measures of the Corporate Tax Base, Laura Kawano, Joel Slemrod. in Business Taxation (Trans-Atlantic Public Economics Seminar) , Devereux and Gordon. 2014

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Working Paper: The Effect of Tax Rates and Tax Bases on Corporate Tax Revenues: Estimates with New Measures of the Corporate Tax Base (2012)
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